CPO Crunch: Get involved, early

David Rae

Although working with suppliers can be challenging, procurement teams that build trusted relationships can reap the rewards

Procurement Leaders’ CPO community will gather next Thursday to discuss the concept of early supplier involvement – a simple idea that formalises how key suppliers are involved early enough to contribute maximum value to a buying organisation’s strategic initiatives. 

Those procurement functions pursuing a deliberate supplier-enabled innovation programme will see the early involvement of suppliers as a positive thing. Entire supplier events are executed to make this happen and relationship management structures put in place to govern it. 

And it makes sense. If suppliers are contributing earlier, a greater share of their resource will be allocated to the buying organisation’s projects with a subsequent, positive impact – whether that be improved speed-to-market, quality, sustainability or resilience. 

However, it’s never quite as simple as it sounds. One of our members, who looks after digitalisation and supplier innovation at a European consumer goods giant, shared some of the difficulties on a separate community call before the holidays. 

“It’s good to do it. It really accelerates the product, but you need to have your governance very clear up front,” he said. “Your objectives, language and goals.” He added that it only really made sense if the teams were physically located in a single location and shared experiences of how even well-established, deeply knowledgeable suppliers sometimes need to be reminded that they don’t have all the answers. 

Dr Robert Suurmond, assistant professor in purchasing and supply chain management at Maastricht University, meanwhile, has been looking into the space for some time. He explained to me how ‘earliness’ isn’t necessarily the solution, and that we need to differentiate between involving suppliers early and involving suppliers extensively. The former is about ideation and open innovation and, he argues, has only marginal impact. The latter is about connectivity and leveraging knowledge and is far more impactful. (Read a short article Robert wrote and, if you have academic tendencies, you can read a much longer article in the Journal of Supply Chain Management.) 

There’s no doubt that involving suppliers early comes with challenges, and simply hosting a supplier day and delivering a grand speech to a backdrop of fancy slides will not deliver a magic outcome. 

But working deeply and collaboratively with a small number of trusted suppliers on long-term strategic projects can – and does – unlock sustainable value for both parties. 

Taiwan elections

At the time of writing, the people of Taiwan were about to take to the ballots in an eagerly awaited election that could have a huge impact for the rest of the world – not just in terms of global security and stability, but also in terms of global supply chains. With the world reliant on Taiwan for semiconductors and other advanced technologies, western businesses would do well to scenario plan the long-term trends and the implications of the vote. 

Hello from Davos

The 54th Annual Meeting of the World Economic Forum kicks off this week in Davos, with more than 100 governments and all major organisations congregating to discuss the four themes of achieving security and corporation in a fractured world; creating jobs and growth; AI as a driving force for the economy and society; and a long-term strategy for climate, nature and energy. World 50 will also be there, meeting many of our members. Let me know if you’re in attendance.

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